The Supreme Court has ruled that equal pay claims can be brought through civil courts rather than employment tribunals, which will extend the time limit to make a claim from six months to six years.
Birmingham City Council, the employer at the centre of the case, appealed to the Supreme Court against an original decision from the High Court and the Court of Appeal, which both stated that workers could bring equal pay compensation claims through employment tribunals and the High Court.
The extended time limit could open employers up to a risk of significant costs from former employees making back-dated claims on equal pay.
Caroline Carter, head of employment law at Ashurst, said: “The decision raises significant concerns for employers and goes to the heart of their risk management strategies and budgets for equal pay claims.
“Employees now have much longer to bring their claim and it opens the floodgates for opportunistic employees to ‘forum shop’.
“Equal pay claims have been on the rise in recent years, in both the public and private sector, and are now set to increase dramatically.”
Claimants will be entitled to equalised pay going forward and also to arrears for equal pay of up to six years.
Sarah Ozanne, an employment partner at law firm CMS Cameron McKenna, added: “This is a significant development in current equal pay laws, and leaves employers open to the threat of claims long after the employment relationship has ended.”
Leigh Day and Co, the law firm representing 174 claimants in the equal pay case against Birmingham City Council, said that the judgment is the biggest change to equal pay legislation since its introduction in 1970.
This may be good law but it has a major underlying public concern. many, if not most, of the Equal pay claims will be lodged against public bodies especially NHS and Local authorities. Neither of these sectors can afford huge increase in costly settlements or legal fees.
Any increase in equal pay damages will have to come off the bottom line. Birmingham City Council was already looking for £17o million savings to 2017 it has to b a lot more now so it is likely that more jobs will go as more restructure and outsourcing is done to balance the books.
Organisation’s should not be discriminating against women in their pay levels, full stop. Cost is irrelevant: if there is no discrimination then it doesn’t matter how the legal process works or what potential levels of compensation are. How would you feel if your spouse or daughters were paid less just because of their gender?.
The decision is bad news for employers because inevitably it exposes them to the risk of claims for far longer than had previously been perceived to be the case, and we will no doubt be giving strategic advice to a range of employers that may be affected. They may have the benefit of appropriate insurance to help cushion the blow. Insurers of both individuals and employers will need to understand the implications of the judgment. Where claims – in relation to substantial bonuses, for example – are made as a result of this case, employers, particularly in the financial services sector, may find it very challenging to gather evidence of decisions taken years ago.
There is a legal dictum which says ‘nobody is above the law.’ Shame on Birmingham Coucil and good luck to the women who had the courage to take on the Council.